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Law
Tribes win decision in contract support cost case


Tribal leaders declared victory on Tuesday after the U.S. Supreme Court ruled unanimously that the federal government must uphold its promise to fully fund self-determination contracts.

In a 8-0 decision, the justices held that federal agencies cannot deny contract support costs to tribes seeking to manage federal programs. Rejecting every single defense offered by the government, the court held that self-determination contracts are "legally binding" agreements that are no different from any other contract.

In a case involving the Cherokee Nation and the Duck Valley Shoshone-Paiute Tribes, the Bush and Clinton administrations argued otherwise. They said contracts under the landmark Indian Self-Determination and Education Assistance Act were "unique" agreements that, unlike government contracts with non-Indians and other parties, did not require full payment.

But the court responded that this line of thinking is not supported by the law. "The act, for example, uses the word 'contract' 426 times to describe the nature of the government's promise," Justice Stephen G. Breyer wrote for the majority.

And neither is the government's refusal to pay supported by appropriations acts that set aside lump sums of money to fund the contracts. "Thus, if it is nonetheless to demonstrate that its promises were not legally binding, it must show something special about the promises here at issue," Breyer wrote. "That is precisely what the government here tries, but fails, to do."

Cherokee Nation Principal Chief Chad Smith praised the decision as a victory for all of Indian Country. The tribe contracts health programs from the Indian Health Service and had been awarded $8.5 million in damages before the Bush administration took the case to the high court.

"Through the years, thousands of Native American families were denied health care because the government refused to meet their contracted obligations," Smith said yesterday. "Today is vindication for them most of all."

National Congress of American Indians President Tex Hall called the ruling "historic" and tribal leaders applauded heavily when the decision was announced yesterday morning at the NCAI winter session in Washington, D.C. "This case was simply about the Indian Health Service trying to wriggle out of its responsibility to live up to its contractual promises," he said. "The Court rightfully found that they can't do so." Through its joint Supreme Court Project, NCAI and the Native American Rights Fund submitted a brief to back up the Cherokee Nation.

Tribal officials expect the decision will have ripple effects throughout the nation as tribes from Florida to New Mexico to Idaho have been fighting for full contract support costs for decades. A class action suit against Department of Health and Human Services had been put on held pending resolution from the top court.

The Interior Department is also affected. Tribes seeking to control more of their affairs had been discouraged from doing so because they knew they would not receive all of the money promised from the Bureau of Indian Affairs.

According to NCAI, the lack of full funding has caused a major problem in the delivery of health, education, law enforcement and other services to tribal members. Tribes who can afford to do so supplement contracts with their own funds while others must limit their programs.

The shortfall at the IHS and the BIA for this year alone is estimated at $142 million, according to NCAI. The shortfall is not disputed by government officials -- Dr. Charles Grim, the director of the IHS, testified last year that 81 percent of contract support costs went unfulfilled.

Yet Grim and others have argued that they can't pay the entire cost of the contracts because doing so would hurt other Indian programs. The court yesterday said that is not an excuse to treat tribes and tribal organizations any different from non-Indian contractors.

"We believe it important to provide a uniform interpretation of similar language used in comparable statutes, lest legal uncertainty undermine contractors’ confidence that they will be paid, and in turn increase the cost to the government of purchasing goods and services," Breyer wrote in the unanimous decision.

Justice Antonin Scalia wrote a short concurrence to state that he agreed with the outcome of the case. He disagreed, however, with a small part of the majority's analysis that he said relied too much on a Congressional report whose value "is that it says precisely what the Court wants."

Chief Justice William H. Rehnquist did not participate in the adjudication of the case because was absent from the oral arguments last November due to his treatment for thyroid cancer. The court has said he will only act in cases he missed to break a tie.

Get the Decision Cherokee Nation v. Leavitt:
Sylalbus | Opinion [Breyer] | Concurrence [Scalia]

Lower Court Decisions:
Fed Circuit: Thompson v. Cherokee Nation (July 3, 2003) | 10th Circuit: Cherokee Nation v. Thompson (November 26, 2002) |

Relevant Documents:
Docket Sheet No. 03-853: Thompson v. Cherokee Nation | Docket Sheet No. 02-1472: Cherokee Nation v. Thompson | Department of Justice Petition No. 03-853 | Department of Justice Supplemental Brief No. 02-1472

Related Decisions:
9th Circuit: Shoshone-Bannock v. Thompson (October 16, 2001) | 9th Circuit: Navajo Nation v. HHS, No. 99-16129 (April 8, 2003)

Relevant Links:
Contract Support Cost Litigation - http://www.cscclass.net
Contract Support Costs, NCAI - http://www.ncai.org/main/pages/issues/
governance/contract_support.asp

NARF-NCAI Tribal Supreme Court Project - http://doc.narf.org/sc/index.html